OSEE: Shares Outstanding: 56.7 million
Insider Ownership: 78.2%
Market Capitalization: $5.8 million
Closing Price Friday 4/31/04: 10.3 cents
OSE USA, Inc.(OSEE) is the exclusive North American sales and marketing organization for Orient Semiconductor Electronics, Ltd.(OSE), a Taiwanese company and the company’s controlling stockholder . OSEE is also the exclusive North American sales and marketing organization for Orient Semiconductor Electronics Philippines, Inc.(OSEP). OSEE derives revenues from fees received on the sales of OSE and OSEP semiconductor assembly and test services to customers headquartered in North America, in accordance with a distribution agreement. The company recently completed the sale of assets of its manufacturing division to a third party company. The assets included related equipment, inventory, books and records, permits and licenses, and intellectual property, for a total of $1 million, including $500,000 in cash and a $500,000 three year note.
The trend in the industry is that most high volume production will continue moving to the low manufacturing cost areas and OSEE, with the capacities and capability provided by OSE and OSEP, can service North American customers who are seeking low cost high volume contract manufacturers in the Asia region. OSE USA, Inc. (OSEE) provides sales/distribution services for OSE and OSEP to a wide variety of customers, ranging from large multinational companies to smaller emerging technology companies, including start-ups. The company’s marketing and sales efforts are focused on North American semiconductor companies that design or manufacture IC devices which are used in applications such as personal computers, modems, disk drives and telecommunication products.
Because of the variety of design and manufacturing services offered by OSE and OSEP, the company believes that it is well positioned to offer services to customers in most market segments. The principal elements of competition in the semiconductor packaging market include delivery cycle times, price, product performance, quality, production yield, responsiveness and flexibility, reliability and the ability to design and incorporate product improvements. OSEE believes it is competitive on the basis of shorter delivery cycle times it can offer customers due to the close proximity of its affiliated manufacturing facility to its customers’ operations and the end users of its customers’ products. The company expects that average selling prices for its products by OSE and OSEP will stabilize or increase in the future if, as many industry analysts predict, the semiconductor industry has an upswing in 2004.
On April 15, 2004, OSE USA, Inc. announced the hiring of Steve Lerner as its new President. Mr. Lerner was founder and chief executive officer of Gigasys Corporation, an advanced semiconductor packaging firm specializing in System-in-Package (SIP) solutions and supplier related management services. Lerner is a recognized authority in microelectronics packaging and test foundry services with significant international experience in both Southeast Asia and Europe. Prior to his association with Gigasys Corporation, Mr. Lerner was CEO and founder of CS2, a Belgian component contract test and assembly company.
OSE USA, Inc. Chairman Edmond Tseng stated, "The Board of Directors of OSE USA welcomes Steve Lerner to spearhead the company's business development program in the North American market. The addition of Steve to our management team signals our commitment to achieve both immediate revenue goals and our strategic objective of restoring the company to profitability." Lerner responded saying, "I am very excited about joining one of the early pioneers in the SATS space, especially at a time when the company's true value relative to its peer group is largely unrecognized. What most people don't realize, is that given the diversity of OSE's mature design and manufacturing capabilities in SATS, EMS, and MEMS, the company is positioned to offer the industry's most comprehensive set of SIP solutions at both the IDM and OEM levels. I look forward to working with the OSE team in bringing this company back to its former stature as a leader in the SATS sector."
Orient Semiconductor Electronics has positioned OSE USA, Inc. to be the U.S. distributor with the goal of expanding its U.S. market. Orient Semiconductor Electronics announced November 2003 revenues of $1.41 billion (NTD), up 8 percent sequentially and up 29 percent year-over-year. The company reported that this was the fifth consecutive month that sales increased. Edward Duh, president, OSE stated, "In the semiconductor division we are seeing an increase in outsourcing from our large customers, such as Infineon, as they utilize our more advanced system-in-package (SIP)technologies." Stricter requirements for higher performance and smaller footprints in the global testing and packaging industry continue to boost demand for stacked packages, SIP, and other integrated designs that use technologies such as ball-grid array (BGA) and chip-scale according to recent analysts comments.
Savvy investors have been buying up blocks of OSEE since the recent hiring of Steve Lerner as new company president. Anyone following the trading in OSEE the past few weeks has noticed that market makers have been very reluctant to fill orders at the ask or above. With insiders owning 78% of the outstanding shares of OSEE, that leaves a very small public float. This could be a rare opportunity for the speculative investor, especially with the new rules in place restricting market makers from naked shorting stocks. If buying pressure comes in next week market makers could be forced to raise the price of shares dramatically to make it attractive for current shareholders to sell and allow the market makers to create a market. Could be a very interesting week...
